Limits on cash payments in Spain

At the end of 2012 there was a modification on the Spanish Tax & Financial regulations.  Some of the changes where introduced to increase the actions in the prevention and fight against fraud.  One of these actions was to set limits on the cash payments of certain transactions.

A cash limit was established on all transactions when one of the parties involved acts as an entrepreneur or professional and the amount being paid was equal or above 2.500,00.-Euros or its exchange value on a foreign currency.

Nevertheless, this limit can be increase to 15.000,00.-Euros or its exchange value on a foreign currency when the payer is an individual that can prove that his fiscal residency is not in Spain and its not acting as an entrepreneur or professional.

In order to calculate the amount involved in a transaction we require taking into account the sum of all partial payments for the purchase of the goods or services rendered.

Cash payments will be considered all those included in Article 34.2 of the Act10/2010, from 28^th April, prevention law of money laundering and financing of terrorism. Amongst other, includes the following:

1. Banknotes and coins, Spanish or foreign.
2. Bank checks made out to the bearer in any currency.
3. Any other way of payment, including electronic means, that can be used as a payment to the bearer.

 With regards to any payments that by law cannot be made in cash, all parties involved in the transactions should ensure to keep all the support documents of the payment during a period of five years from the day of the transaction, to be able to prove that the payment was made by other means different than cash.  And, if requested by the Tax authorities they must present proof of the payment.

The non-fulfillment of these cash limitations constitutes a tax infringement; and all parties can be considered offenders, the one paying with cash and the one receiving the cash payment.  The Tax Agency can go against either of the parties, or against both of them.

The breach of these limitations is considered serious.

If one of the parties involved in a transaction that breaches the cash limits, reports to the Tax Authorities within the following three months after the transaction by informing of the cash amount and identifies the other party involved, this will remove any responsibility against him and will not be liable to any penalty.

The penalty will be a monetary fine proportional to 25% of the cash paid.

Do not hesitate to contact one of the lawyers, accountants and tax advisers for any tax, legal and accountancy matter

Sara Duarte, Accountant in Marbella, Spain